ED SCHULTZ, HOST: Good evening, Americans. And welcome to THE ED SHOW tonight, live from Washington.

One of the biggest sports icons of the modern era, Penn State`s Joe Paterno is retiring amid allegations that he did not do enough to stop the alleged sexual abuse of boys by a former assistant coach. At this hour, the scandal may result in the ousting of Penn State`s president and the federal government has announced an investigation.

This is THE ED SHOW -- let`s get to work.

(BEGIN VIDEOTAPE)

GOV. JOHN KASICH (R), OHIO: When you get beaten, you have to admit it, and you`ve got to congratulate and shake the hands of those folks who prevailed.

SCHULTZ (voice-over): Common sense, liberal ideas prevailed in Ohio and all across the country on Election Day.

And tonight, there is breaking news in the Penn State sexual abuse scandal. Eugene Robinson of "The Washington Post" on the moral failings in Happy Valley.

And "Ring of Fire" radio host Mike Papantonio breaks down the legal arguments against Joe Paterno.

(END VIDEOTAPE)

SCHULTZ: Good to have you with us tonight, folks.

Every college football fan across this country tonight is saying, how in the world did this happen? Top Penn State University officials are accused of failing to properly address decades of sexual abuse against children, allegations that are just unbelievable.

Tonight, the fallout continues. The Penn State board of trustees held an emergency meeting tonight, reportedly to decide the fate of at least two university leaders. Legendary football coach Joe Paterno announced his retirement today, effective at the end of the season. But "The New York Times" reports that Penn State may still fire them.

In a statement, Paterno addressed the sexual abuse incident saying, "With the benefit of hindsight, I wish I had done more."

Former assistant coach Jerry Sandusky was arrested Saturday on charges of sexually abusing eight young boys. A ninth accuser has come forward.

Penn State President Graham Spanier may be removed as soon as tonight by the board of trustees.

ESPN reports former Pennsylvania Governor Tom Ridge is being as considered as Spanier`s replacement at the university.

To give you an idea of the stunned reaction to this story, here`s Matt Millen, a former Penn State linebacker, and NFL-er and board member of Sandusky`s charity.

(BEGIN VIDEO CLIP, "SPORTSCENTER"/ESPN)

MATT MILLEN, FORMER PENN STATE PLAYER: We all have our own opinions. I have some really strong opinions. I shared them with you this morning. And to be honest with you, and you can probably hear it, and I apologize to you, I get mad. And it`s -- it`s pretty disturbing.

UNIDENTIFIED FEMALE: It is. It`s a program that`s like family for you, Matt. And I think we all understand that.

I think that reaction by Matt Millen pretty much sums it up for every American out there, especially those who have been associated with Joe Paterno and 45 years as the head coach of Penn State. How in the world did this happen?

EUGENE ROBINSON, MSNBC POLITICAL ANALYST: The winningest coach in Division I. And when you read that grand jury report, you are literally sickened. It is -- it is shocking, it is stunning, that this could happen under the noses of this legend, of the sports world.

SCHULTZ: This man has been in education for decades. He has been a model of integrity, a model of how to do this profession. He has been a leader.

For Joe Paterno to possibly turn a blind eye and not do enough, where does that leave us tonight, Gene?

ROBINSON: It leaves us confused, certainly disappointed, disheartened. But, it leaves us -- at least leaves me hopeful that there`ll be a reckoning here. There`s got to be a reckoning here.

I mean, there`s point in the grand jury report at which an assistant, Mike McQueary, who was a quarterback for Joe Paterno and an assistant for the football team, allegedly witnesses an episode of abuse in the Penn State lockers, a boy, apparently 10, being abused, allegedly. And number one, McQueary does nothing except the next day, he and his father having decided to report it, he reports it to Paterno. He doesn`t stop it at the moment, which is incredible to me.

But Paterno hears about it, he reports it up the chain of command, apparently does nothing else. Makes no effort to find out about the boy, about the boy who his trusted assistant saw or says he saw being molested. That`s incredible.

SCHULTZ: As a football coach, there`s no greater source than one of your recruits, one of your players, somebody who`s your graduate assistant at the time, comes in and tells you this.

To say that this is an error in judgment on Joe Paterno`s part is far understated. He did go to the university officials and report it, but he let it sit there. He should have known something else should have come down over this.

Where, in your opinion, is Joe Paterno on this tonight? Should he step down for the integrity of the university?

ROBINSON: In my opinion, he should. He has announced that he is resigning at the end of the season, this is his last season. Joe Paterno has hung on to this job. He`s 84 years old.

Several years ago, this president, in fact, reportedly wanted to kind of ease him out -- Paterno is the most powerful man on campus. He stayed because he wanted to stay.

SCHULTZ: This isn`t about a coach. This isn`t about a player. This is -- and you could talk about 409 wins. The number that counts tonight is nine allegations, an eyewitness.

And the integrity of Penn State University is on the line right now, and I`m sure those board of trustees are talking about that at this hour.

Gene, stay with us. We want to talk more about it.

Also joining us on the phone tonight is "Washington Post" sports columnist, and WJFK radio host, Mike Wise.

Mike, good to have you with us tonight.

MIKE WISE, WASHINGTON POST (via telephone): Thanks, Ed.

SCHULTZ: What can you report to us? What do you know about the story at this hour?

WISE: At this hour, the board of trustees are, in fact, meeting and I believe -- I don`t know if the futures of President Graham Spanier and Coach Joe Paterno will be decided tonight, but if they are, I would expect a word within the next 24 to 48 hours at the most.

I cannot imaging Joe Paterno`s kids waiting to go into that stadium Saturday, having no idea whether they`re coach is going on to the field with them. So, I wouldn`t be surprised if that decision were made in the next 24 hours.

SCHULTZ: Also joining us tonight is B.J. Schecter, executive sports editor of SportsIllustrated.com.

B.J., it is not about Joe Paterno anymore. It`s about the integrity of the university. What difference does it make if he coaches a few more games? What do you think?

B.J. SCHECTER, EXEC. EDITOR, SI.COM: He shouldn`t -- he does not deserve to be on the sideline for Saturday`s game. I think, you know, his lack of action in this case, as you guys have been talking to, led to further abuse to other kids. And that`s far greater than any football game, that`s far greater than, you know, anything that he`s done for the university to this date.

And he`s done a lot of good. But he needs to step aside or they need to push him aside, because he does not belong out on that field.

This is -- you know, we talk about scandals in college sports and there have been a lot of them in the last two years, this goes way beyond that, because this is criminal. This makes cheating and paying players, you know, look like peanuts.

This is little boys` lives that were affected. And there needs to be some harsh measures taken. And the first thing that they need to do is remove Joe Paterno. He can`t go out on his own terms like he wants to now. He lost that privilege.

SCHULTZ: Yes, how could Joe Paterno have a defensive coordinator that he had a long association with him, who helped him win two national championships, when this story comes to Coach Paterno, how could he not have a face-to-face conversation with the defensive coordinator, Jerry Sandusky, and say, what is happening here?

And I want to know if he had that conversation, number one. And secondly, why didn`t he do something about it? Did Sandusky deny it?

What do you think, Mike?

WISE: I spoke to a guy named Matt Pankas (ph). He was a graduate assistant, 1987-`88. He found this also to be unbelievable because he said to Joe Paterno reported to nobody at Penn State.

Joe -- the idea that somewhere there was a protocol or right channel where Joe Pa would somehow be excused from his duty because of the reporting protocol, that`s untrue. Most athletic directors in a big-time program are underneath the football coach, in reality.

And also, the guy knew everything about every player, every coach on that team. And he said he would be shocked if he didn`t know.

But I would say this. Anybody that`s had a family member abused, anybody that`s had, you know, a clergy member abused, someone. I think that you want to appeal to people`s best angels, and I think that you hate to believe something about that.

The problem is that a kid`s life was at stake. And that`s where you run into all kinds of conundrums.

SCHULTZ: Gentleman, I have to tell you, I`m shocked that Joe Paterno isn`t taking himself out of the picture and saying, we`ve got other things to take care of. This is much bigger than any football game or team. This is about the integrity of the university.

I find it amazing that he didn`t confront Sandusky. That hasn`t been reported yet. But -- I mean, I`m speculating. How in the world could a football coach with that association with that man for so long have an accusation put at him and then not address it face to face? Football coaches don`t shy away from stuff like that.

And, B.J., how should the university respond? It would seem to me that they`ve got some legal things that they`ve got to deal with right now.

SCHECTER: Absolutely. I mean, when you think -- you think they have, you know, first of all, they have a moral obligation to do what`s right because, over a number of years, 10-plus years, they didn`t do what was right. That stems all the way from the school president, all the way down to Joe Paterno.

And let`s -- you know, let`s call a spade a spade. Joe Paterno was the most powerful --

SCHULTZ: Exactly!

SCHECTER: -- person in that university. And he didn`t do what was needed to be done. They were all living in a bubble.

Joe -- anybody that`s been to Penn State knows, it`s all about Joe Paterno there. Everybody bows down to him.

SCHULTZ: No doubt. And he`s a legend. He`s a godly figure there at Penn State. No one has more power.

And he has an impeccable reputation, integrity in the coaching industry.

But, Gene Robinson, I mean, you could make the case on the appearance that Joe Paterno was protecting an alleged child abuser.

ROBINSON: That appearance has certainly been left. He needs -- he`s going to have to clear this up. If he had a conversation, he`s got to clear this up.

There was a 1998 incident in the showers with two 11-year-old boys that was investigated by the university police. How could he not have known about that investigation? How could he not have had that in mind when the 2002 episode, where McQueary saw the boy being abused, allegedly, occurred?

I -- a big-time football coach is by definition a control freak. He knew everything that was going on in that building, you have to suppose, knew everybody. So, tell us! What`s the deal?

SCHULTZ: This man is a classy man. This man is about integrity. This is just so out of character for Joe Paterno. This is part of his resignation announcement.

WISE: Well -- go ahead.

SCHULTZ: Do you want to say it, Mike? Go ahead.

WISE: No, you know exactly where it is, but go ahead. I was going to ask something after you were done.

SCHULTZ: Well, this is what he says, "At this moment, the board of trustees should not spend a single minute discussing my status. They have far more important matters to address. I want to make this as easy for them as I possibly can."

Well, Joe, the best thing to do is to resign. That`s making it easy.

WISE: You`re exactly right.

SCHULTZ: That`s taking the issue out of the hands of the board of trustees.

(CROSSTALK)

WISE: -- allows him to take the field Sunday. I think what they`re saying to Happy Valley, which is -- I can`t believe anybody calls it that anymore, but anybody at Penn State, and sports society in general, that we value giving a coach a sendoff more than we survivors of child abuse. And I think that`s what people have to remember.

This is -- this story has somehow morphed into Joe Pa staying or going. You`re right. It`s not about. It`s about kids who lost their innocence.

And, you know, if you`re more into seeing your date than stolen youth, that says everything about you and your university, and it sure as hell says a lot about us as a society.

SCHULTZ: Mike Wise, B.J. Schecter, Eugene Robinson, great to have you with us tonight. I appreciate your time. Thanks so much.

Coming up, Penn State sexual abuse scandal has big legal implications, and for more than just two officials already charged. Mike Papantonio joins me next.

And later, Democrats won big all over America last night. Senator Bernie Sanders and Congresswoman Maxine Waters will be here to tell us what it means if anything for 2012.

You`re watching THE ED SHOW on MSNBC. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: More to come on THE ED SHOW tonight. Mike Papantonio joins me next to talk about the legal implications coming out of the sexual abuse scandal at Penn State.

Later, Democrats came out strong last night and took down radical right policies in Ohio, Mississippi, and other states. Senator Bernie Sanders and California Congresswoman Maxine Waters join me to talk about keeping the momentum going into the election year.

And two of Herman Cain`s accusers are planning a joint press conference. And since Cain is staying in the presidential race, conservatives want his chief of staff out.

Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

Failing to report possible child abuse to police is a crime. And two Penn State officials have been charged. The actual law is complicated, but it still raises questions about why other Penn State officials haven`t been charged with a failure to report.

Penn State football coach Joe Paterno is at the center of it. In 2002, when he was informed of Jerry Sandusky`s alleged sexual abuse of a 10-year-old child, Paterno turned it over to two other officials, Athletic Director Tim Curley and Vice President Gary Schultz.

But when those two men didn`t report the incident, did Paterno have a duty to follow up and do it himself?

There are allegedly nine child abuse incidents involving Jerry Sandusky. In at least three of those incidents, various Penn State officials were informed of possible child abuse. Up to seven other Penn State employees or officials may have known about child abuse without reporting it to the proper authorities.

What does this all mean legally?

Let`s bring "Ring of Fire" radio host and attorney, Mike Papantonio.

Mike, good to have you with us tonight. Highly unusual story for us to be talking about this. There`s nothing else like it.

Let`s focus on the 2002 incident, which Joe Paterno was informed. He turned it over to school officials, two of them, Curley and Schultz, but they didn`t report it to authorities.

Did Paterno -- did he do enough legally? Sort this out for us, Mike.

MIKE PAPANTONIO, HOST, "RING OF FIRE": Ed, there are certain statutory laws that require people in certain positions, that they have to go directly to the police. For example, you`ll see statutes that say teachers or -- schoolteachers or doctors or nurses, once they learn about sexual abuse incident, they`re required to go directly to the police.

Then it gets a little fuzzy beyond that, because at some point, the requirement is that the person has to report to the person up on the chain of command, and it`s expected that person has to report to police. A supervisor, for example, may have this responsibility to say, Joe told me that and I have to go do something about it.

Look, here, Paterno was clearly told that Sandusky was -- he was raping a 10-year-old boy in a locker room shower. There`s no other way to put it.

The person who reported it, Ed, went to Joe Paterno`s house and told him that. And then Joe Paterno says, well, look, I did what I was supposed to do. I reported it to the athletic director.

And you know what, Ed? He never asked another question about it. Now, I`ve got to --

SCHULTZ: See, Mike, I got to tell you -- I just don`t think that flies for Paterno if that`s the way it comes down. This is a man who is in a leadership position. He is in a serious position of responsibility at that university.

There isn`t anymore greater authority outside the president of the university than Joe Paterno and it`s been that way for decades. How in the world could he stand there idle and not follow up on this? What`s his culpability?

PAPANTONIO: You`re right. Look, here it is. Look, is it callous, reckless indifference? Is it disgusting to us that a man in his position would allow this to go on and not ask a question about it? Not even ask another question about it.

First of all, it`s not believable that he didn`t ask a question about it, but if he didn`t, it`s pretty disgusting. But, I`ve got to tell you, fortunately, for Joe Paterno, the chances of him being charged with a felony are slight.

Here`s the real problem. In 1998, the police go -- the police were told of another incident just like this. And you know what, you know what? They were told -- the campus security was told the same thing.

As a matter of fact, the mother was on the telephone with the police. The police were listening to Sandusky actually admit that he had raped another child in the showers. The campus police knew nothing about it. The local police knew nothing about it.

And so, this story -- this story widens. Let me just tell you, it may not go -- it may not get Joe Paterno, but those board of directors who are meeting tonight, they sure better be asking themselves, how wide is this net? Because, in fact, you can`t -- the things that come to my mind right off the bat are interference with a criminal investigation, a conspiracy to interfere with that criminal investigation, or how about an accomplice after the fact where you have done nothing?

And beyond that, Ed, you think about the civil case here, the civil case is a monster. It will make what happened in the Catholic Church look like nothing happened.

SCHULTZ: Well, another thing is, did anyone on the board of trustees know about this? How could something like this take place, go up to the president, and yet no one on the board of trustees knew about it? I mean, I don`t know how you can go down this road without having a thorough investigation. Who knew, when did they know it, and why or why not did they do something about it?

I mean, so it would seem to me that Penn State has got a lot of legal questions to answer tonight.

PAPANTONIO: It`s worse than that, Ed. Penn State knew about it. Penn State actually went to an investigating officer all the way back in 1998 and asked the investigating officer to drop the investigation.

This board of directors, this board of trustees had better understand, this is not over at all. Simply, look, when you read -- when you read the finding of facts of this case, and you see the possibilities of who could be involved in a wider change of indictments, you start understanding, this is not just about Joe Paterno here.

SCHULTZ: All right. All right. Mike, for just a moment -- put yourself in the position of representing one of the families of the victims. I mean, it`s gut-wrenching to think about that. But take us down that road for a moment.

PAPANTONIO: Well, here it is. Here it is. First of all, the university is on the hook here.

Look, it is a lock case. There is no way you can bring a case against this university with -- their involvement has been endless.

The security at the university was involved, the -- you had supervisors involved, where they didn`t just ignore it, Ed, they intentionally went out and tried to make it disappear. So, from 1998 to this day, 2011, you had children victimized by a predator, by a sick predator.

And Joe Paterno knew about it. And you know what? He shouldn`t be given the possibility of resigning. The man should be fired.

You`re only as good as your last game, Ed, and his last game is disgusting. Look, we all want heroes in our lives. We all want to say, we want to imagine the heroes and we want to create myths behind the heroes.

But we have to be honest when we find out that the myth isn`t true. ? And truth is, we know in 2011 that he was told by someone who saw it with their own eyes, a 10-year-old being raped in the shower by Paterno`s best friend and Paterno does nothing about it.

Let me just tell you something. This university, they better call their insurance company and say, you better pony up to the table on this one, because it`s a big, big case.

And the state of Pennsylvania as well. I mean, it could be very wide-sweeping.

Mike Papantonio, thanks for your insight and expertise on this tonight. I appreciate it. It is just a blockbuster story and it`s absolutely unbelievable.

Voters have rejected the heavy-handed anti-worker Republican agenda in many states in the nation. Congresswoman Maxine Waters will weigh in. What does it mean?

Up next, Tea Party Congressman Joe Walsh channels one of our "Psycho Talk" all-stars. He completely loses it during a meeting with constituents. Joe, you`re going in the zone.

(COMMERCIAL BREAK)

SCHULTZ: And in "Psycho Talk" tonight, Republicans have a new technique of talking to constituents. It`s called meet and scream. You`ve heard of meet and greet, this is meet and scream. Illinois Congressman Joe Walsh tried it out recently. A few days after receiving a pro-family award from the Family Research Council, the stress of owing more than $100,000 to his own family in child support might be catching up, getting to the congressman. Walsh got a little testy with his constituents when they complained about the power of the big banks.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The big banks, they go back into the banks and they just keep rotating --

WALSH: I agree with you about that. That`s not the problem! It`s not the private marketplace that created this mess! What created this mess is your government. Don`t blame banks and don`t blame the marketplace for the mess we`re in right now! I am tired of hearing that crap.

(END VIDEO CLIP)

SCHULTZ: Don`t blame the banks. Walsh is getting all worked up in defense of the one-percenters. And his rage didn`t end there.

(BEGIN VIDEO CLIP)

WALSH: I am tired of hearing that crap.

UNIDENTIFIED FEMALE: Taking money from people who know they couldn`t afford it.

WALSH: There are already mechanisms in place --

UNIDENTIFIED FEMALE: You don`t have to --

WALSH: This just pisses me off. Too many people don`t listen. Do you want more regulation? Is that what you want? Do you want Dodd-Frank? Is that what you want?

UNIDENTIFIED MALE: Hang on.

WALSH: Quiet for a minute!

UNIDENTIFIED MALE: What did I say --

WALSH: Quiet for a minute or I`m going to ask you to leave.

(END VIDEO CLIP)

SCHULTZ: Joe Walsh already has an excuse for his screaming fit. He was hungry.

(BEGIN VIDEO CLIP)

WALSH: I made the mistake of doing this on a very empty stomach with a little too much coffee, which sort of got me a little too fired up.

(END VIDEO CLIP)

SCHULTZ: A little too the fired up? Buddy, your attitude was more along the lines of this classic outburst.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Get off my phone you little pinhead! Get off my phone!

(END VIDEO CLIP)

SCHULTZ: Joe, you`re in good company with one of the biggest psycho talkers of all time. Screaming at constituents in defense of the banking industry is deadbeat psycho talk.

Still ahead, the middle class spoke up against the hard right-wing policies put out by some governors and put up some big victories across the country. Senator Bernie Sanders reacts. He`s been talking about all of this for a long time.

And the RNC chair, well, they`re spinning hard after Republicans lost big last night. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: All right, let`s talk about what happened last night around the country. First of all, don`t let anyone lie to you. America is not a center right country. The Tea Party is not the driving force in American politics. That was proven last night. And the middle class is not the problem for our budgets in America.

Last night commonsense liberal ideas won out over right-wing lies and the garbage that has been shoved down America`s throat. A radical, and I mean radical, personhood bill was defeated deep in the heart of Dixie last night in Mississippi. It doesn`t get any further south than that.

The Arizona Senate president, Russell Pearce, the Republican brain behind Arizona`s un-American immigration law, what happened to him? He was recalled. He`s out. In Michigan, Republican Paul Scott, chair of the state`s House education committee, was recalled after he voted to cut education funding. Scott also supported stripping collective bargaining for schoolteachers. That went down.

In Iowa, Democrats retained control of the state Senate. This was a big fight when former television anchor Liz Mathis beat her Republican opponent by a 56-44 margin.

And in Maine the middle class defeated a Republican effort to restrict voters` rights, same-day registration. They beat it back in Maine.

And over in New Jersey, the coattails of the big guy, well, it didn`t help any of the Republicans he endorsed last night. They all lost. In Mitch McConnell`s state of Kentucky, Democrats won big. Democratic governor Steve Beshear trounced his Republican opponent to win re-election.

Speaker Boehner and Governor John Kasich are crying in their beer after Ohio voters killed the most anti-union bill in America, an overreach, to say the least. Arizona, Michigan, Iowa, Maine, New Jersey, and Ohio all have radical right-wing Republican governors who have absolutely attacked workers to balance their budgets. Middle class voters who were asleep at the switch maybe in 2010 or the midterm, guess what, they`re awake now in 2011.

The question is, will the Democrats recognize that the tide`s coming in on a possible sea change in America? Can they keep the momentum going? Joining me now is senator Bernie Sanders, Independent from Vermont. Senator, great to have you with us tonight.

SEN. BERNIE SANDERS, (I) VERMONT: Good to be with you.

SCHULTZ: Look, we`ve got different pockets of the country with some crucial issues, Traditional conservative values that were voted down huge. What`s it say to the Democrats?

SANDERS: Well, I`ll tell you, Ed, in my view, what happened in Ohio last night was the most significant political victory for working class America that I have seen in many, many years. If I were Republican, I would be extremely nervous.

What did last night say? It said that when the working class and the middle class stand together and fight for their economic rights, you know what, there`s no stopping them. That is the vast majority of the American people, and they will win every single time.

So the Republicans are nervous. The question is whether Democrats snatch defeat out of the jaws of victory. The issue here is if you stand on issues that ordinary people feel strongly about, you can win and do the right thing for public policy. Some examples. Democrats need to be loud and clear to the American people we will not cut Social Security, Medicare, and Medicaid. And you know what overwhelming numbers of people will say? Thank you, Democratic Party.

SCHULTZ: You look at the polls going into last night`s Senate Bill five. Issue two, they wanted a no vote. The polling was very clear. That`s the way it turned out, over 60 percent. The polls are showing to the super committee, don`t mess with Medicare and Medicaid and Social Security. The question is, are they going to get the message? But to the Democrats, it seems to me in 2012 you stand with workers, you can`t lose. Do they get it?

SANDERS: I wish I could tell you that they do. Some certainly do. We got some great senators there who understand it, who are fighting the right fights. On the other hand, there are people who are tone deaf and there are people who are more interested in corporate donations than in the needs of working --

SCHULTZ: But if you look at the party platform of the Democrats, that`s what they were voting on last night in many of these states.

SANDERS: You go it, Ed. Look, if the Democrats say, do nothing more, in my view, than what the American people want. What do they say? They don`t want cuts in Social Security, they don`t want cuts in Medicare. What else do they want? They want to move us towards a balanced budget with a deficit reduction by what? Asking the wealthiest people in this country to start paying their fair share in taxes, and all these outrageous loopholes, take a hard look at military spending. Maybe if the Democrats do what the American people want, they can win. And not only win, they can win very big.

SCHULTZ: Listen to what Governor John Kasich in Ohio had to say last night after defeat.

(BEGIN VIDEO CLIP)

GOV. JOHN KASICH, (R) OHIO: The people have spoken clearly. You don`t ignore the public. I also have an obligation to lead. I`ve been leading since the day I took this office, and I`ll continue to do that. But part of leading is to listening and hearing what people have to say to you.

SCHULTZ: "Don`t ignore the people." That`s exactly what the Republicans have been doing. They`ve been on the wrong side of every survey that`s been out there. Do you think this would possibly change some heads in Washington, some thinking on the Republican side?

SANDERS: I hope so, and in fact, I think that may very well happen. As you`ve just indicated, every single poll out there shows that the Republican leadership is literally a fringe group. They are way out of touch with the American people. You go out and you ask people, gee, do you think we should give tax breaks to billionaires and cut Social Security? What do you think, 10, 15 percent?

So the Democrats have got to stand up, be very clear for a change, about what they believe. And that is, they`re prepared to stand with working families, take on big money.

SCHULTZ: And this gives President Obama, I think, a roadmap to victory in 2012. You agree with that?

SANDERS: Absolutely.

SCHULTZ: I think it does. Vermont senator Bernie Sanders, great to have you with us. You are the best.

SANDERS: Thank you.

SCHULTZ: Coming up, voters smack down the Republican overreach last night. I`ll ask Congresswoman Maxine Waters, how did Democrats carry the momentum in the House in 2012? That is next. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: And the big results last night, you can only read it this way. Democrats won big last evening from Mississippi to Maine, and Ohio workers were right in the center of it all. And with the White House is really joining in the celebration for the middle class victory. President Obama`s press secretary released the following statement, "The president congratulates the people of Ohio for standing up for workers and defeating efforts to strip away collective bargaining rights and commends the teachers, firefighters, nurses, police officers, and other workers who took a stand to defend those rights."

Vice President Joe Biden weighed in as well, saying, "Ohio has sent a loud and clear message that will be heard all across the country -- the middle class will no longer be trampled on." I hope that`s true.

The next step for Democrats is to take the momentum of last night`s victories and use it coming up in 2012. Can they do it? Will they do it? Joining me now is Congresswoman Maxine Waters of California. Congresswoman, great to have you with us tonight.

REP. MAXINE WATERS, (D) CALIFORNIA: Thank you!

SCHULTZ: I think we`re seeing the tide coming in on the sea change. I don`t know how else we can look at it. But what better road map could the Democrats have on what they have to do and what banner they must carry in 2012? Your thoughts -- where does it go from here?

WATERS: Well, I think you have characterized it correctly. It`s a road map. And it gives us the direction that we should go in order to win in 2012. And I think that people have been very clear in what they think about some of this public policy that has oftentimes been distorted by the right wing.

As you said, as you look at Arizona and Mississippi and Ohio, not only did the people say we respect the right of workers to bargain, that organized labor worked very hard. A lot of sacrifices have been made. People died for the right to be protected in the workplace. And so that was very clear.

Mississippi, one of the most conservative states in the union, spoke up for women and said you will not criminalize abortion, that this personhood amendment goes way too far, and it was defeated. And so I am just so elated and very pleased that it truly is a roadmap. For Democrats, we should take it and run, and we should be victorious in 2012 every seat that we go after, yes.

SCHULTZ: Take it and run is what it`s all about. Here`s the bottom line, as I see it. You`ve had some radical governors out there on the Republican side who just recently got elected in 2010 that have decided to balance the budget on the backs of the middle class and the backs of workers. Doesn`t this set the table for the Democrats to come right back and say, OK, the people have spoken. Now let`s make sure that the Bush tax cuts expire and let`s make sure that we go back to that 39 percent tax rate for the wealthiest Americans. What do you think of that?

WATERS: I absolutely think that is true. And this super committee that we have in the Congress right now as a result of the negotiations that went on in raising the debt ceiling should get this message. And they should resist all attempts by the right wing and the Republicans and the Tea Party to try and again tax the middle class and not doing anything about that one percent that is --

SCHULTZ: I got to ask you, you make a great point there, but where is the Tea Party today? I mean, are they politically insignificant all of a sudden? Are they just taking a nap right now? Did they not get involved in all of these votes? The Tea Party took a whipping last night, big-time. They took a loss at the polls, huge.

WATERS: They took a beating. They absolutely took a beating. And it was very interesting to watch Governor Kasich say, I was wrong. That the people have spoken. And while I have offered leadership, I understand what the people are saying. I thought that was very interesting, and hopefully that will send a message to the Republicans and to the right wing that the people have spoken, and they don`t intend to have their rights just given away or taken away by anybody.

SCHULTZ: Well, I got a little advice for all of those folks that live in states where there are radical governors who are tried to overreach. Bottom line here is you can`t trust Republicans. They have obstructed so much in Washington. You can`t trust these Republican governors. And don`t make the same mistake twice, folks. I guarantee you, they may be talking the good game after the loss, but they`re going to get right back to work and they`re going to go right back after the middle class again, and they`re not going to come forward with any job proposals whatsoever because it`s in their DNA not to do it, because it would help the Democrats. And they know, really, it`s about power. It`s not about being on the correct side of the issues with the people.

Congresswoman Maxine Waters, great to have you with us tonight. I appreciate your time. Thank you.

WATERS: Thank you so very much.

SCHULTZ: You bet.

Coming up, more trouble for Herman Cain. Two of his alleged victims will hold a joint news conference. We`re all waiting for that. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Things are not looking good for Herman Cain. Two of the women accusing Cain of sexual misconduct will appear together at a joint news conference. The attorney for Karen Kraushaar says that his client along with Sharon Bialek will join together to discuss the specifics of their complaints against the GOP front-runner.

Bialek was the first woman to go public. Kraushaar was then outed by Rupert Murdoch`s online newspaper "The Daily." Kraushaar`s attorney says an attempt is to being made to get a third Cain accuser to come forward as well. Meanwhile right-wing bloggers and Cain`s staffers are calling for Cain`s chief of staff, Mark Block, to resign. They say Block has botched the campaign`s handling of the scandal. Last night Mr. Block went on FOX and pointed the finger yet again.

(BEGIN VIDEO CLIP)

MARK BLOCK, HERMAN CAIN`S CAMPAIGN MANAGER: At the press conference, it was brought up that the -- that Karen Kraushaar had come out as one of the women, so we come to find out that her son works at "Politico," the organization --

UNIDENTIFIED MALE: Have you confirmed that? I`ve been hearing that all day, rumors about that. You`ve confirmed that, right?

BLOCK: We confirmed it with that he, does, indeed, work at "Politico" and that`s his mother, yes.

(END VIDEO CLIP)

SCHULTZ: Block seemed to be referring to "National Journal" reporter, Josh Kraushaar. He told "The Hill" newspaper, quote, "I am not related in any way to Karen and I haven`t worked at "Politico" since June of 2010."

And at this hour, another setback for Herman Cain. The American mustache institution is rescinding its endorsement of the Republican front-runner.

Let`s bring in Krystal Ball, Democratic strategist and former candidate for Congress, and Joe Watkins, Republican strategist. Well, here we go. Joe, should Cain`s chief of staff resign? What do you think?

JOE WATKINS, REPUBLICAN STRATEGIST: Well, I would have handled the whole thing differently, Ed. What I would have done is, I would have realized that Herman Cain, like you and a lot of other people who are in the public eye, has met tens of thousands of people as a public figure over the last 25 years, and it`s very likely that over the course of that time he`s probably offended some people with things he`s said or people have taken offense at things he`s said and done.

And so if I were the campaign manager, I would have told Herman Cain to say, you know what, I`m really sorry. I`ve met tens of thousands of people and along the way I have may have offended some folks. If I`ve offended you or done things that are unseemly, I want to apologize now.

SCHULTZ: Isn`t that a conditional apology, though? When you cross the line, you cross the line. Whether we`re in public life or not, does it matter? The fact is this man wants to be president of the United States, and now he has got two people who are willing to jointly hold a press conference and tell the American people this guy is a liar. Krystal Ball, what do you think?

KRYSTAL BALL, DEMOCRATIC STRATEGIST: Well, absolutely. I mean, this goes way further than a little misunderstanding, or maybe they didn`t understand my humor. I agree with Joe, he should have come out at the beginning. They knew this was coming. He knew these settlements were out there. He had briefed his staff when he ran for Senate in 2004. He should have come out from the beginning and said, you know what, I`m sorry. That would be the only way to help kill this story. It`s been going on for weeks and weeks and it`s nowhere near the end.

SCHULTZ: Krystal, what impact would a joint press conference have on Herman Cain?

BALL: It just continues the narrative. This is really devastating for him.

Here`s the thing, Ed. Herman Cain is not going to be the GOP nominee. Every day that this is in the news, this undercuts the Republican Party. This hurts them with women. This keeps the focus off of the economy, which is where they want it.

SCHULTZ: What about that, Joe? Does it hurt the Republican party brand?

WATKINS: I think it just hurts, it takes away from -- it`s a distraction, an unfortunate distraction that takes away from the real issue, which is, how do we get 14 million Americans who aren`t working back to work? And who among these candidates have the solution to that?

SCHULTZ: I don`t mean to interrupt you, Joe, but he is so damaged as a candidate right now, how can he go talk about unemployment? How can he talk about job creation? He`s got so much swirling around him right now, he`s got to people who want to come out and say he`s a liar. How does he get passed that?

WATKINS: I don`t think he`s that damaged. I think that this is a blow and a serious blow, and you should always take sexual charges and allegations of sexual harassment seriously, but I don`t think it`s a damaging blow or even a death blow. I said the other day on the show that candidate Clinton handled the same challenge back in 1992 when a press conference was held about him and some of the things that he had done, and he handled it very, very well. And as a result, he ended up being the nominee and he won the election and became the president of the United States.

BALL: We`re not even talking about sexual harassment here. These allegations are about sexual assault. I`m not interested in defending anyone, Democrat, Anthony Weiner, John Edwards democrat, whatever. I`m not interested in defending them. These charges are serious. And it is a distraction from important issues facing the country, but sexual harassment is a very, very serious and common issue that needs to be addressed.

WATKINS: I agree. I agree.

SCHULTZ: Well, it`s going to get doubly tough on him if you`ve got a couple of people who are willing to come out. And who knows, there may be more?

Krystal Ball and Joe Watkins, thanks for your time tonight. I think Herman Cain needs to do the right thing and step out.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.END

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